SCI Privatisation: Maharashtra government holds key to Shipping Corporation of India privatisation

The Maharashtra government has veto powers over the transfer of Shipping Corporation of India’s (SCI) corporate headquarters in Mumbai and if it were to not approve the transfer, it could potentially thwart the central government’s privatisation plans for the state-owned shipping company, according to documents seen by ET.

SCI’s privatisation is planned as a two-step process, which will involve the demerger of the non-core assets of the company including its corporate headquarters into a separate entity and the sale of the original company, which will house only the shipping business. The demerger is a necessary prerequisite for the privatisation.

According to sources, Maharashtra’s state government could have reservations over the transfer of Shipping House (SCI’s corporate headquarters) as this was originally given only for the use of SCI. Further, there are concerns that if the building were to be handed over to a private player, this could pose security risks as the building is located on Madame Cama Road, across the street from Mantralaya, the administrative headquarters of the state government of Maharashtra. This is also the office of Chief Minister Uddhav Thackeray.

The demerger planned through a National Company Law Tribunal (NCLT)-approved scheme of arrangement mentions that two properties of the company, Shipping House and Maritime Training Institute (MTI Powai), a 44-acre campus located on the outskirts of Mumbai, will stay with the firm to ensure there is no business disruption till a buyer for SCI is found.

“Notwithstanding the effectiveness of the scheme, to ensure that there is no undue financial implications or disruptions for running the current operations of the company, the process of hiving off and alienation of MTI Powai and Shipping House will be made effective only after the transfer of management control of SCI to the acquirer under the strategic disinvestment. The transfer will be subject to the approval of the state government,” the scheme of arrangement documents read.

Emailed queries to the office of Uddhav Thackeray and to Maharashtra’s chief secretary did not elicit a response. The central government’s Department of Investment and Public Asset Management did not respond to requests for comment.

The government of India had announced the sale of its 63.75% stake in SCI through a preliminary information memorandum issued to prospective bidders on December 22, 2020.

A new company, Shipping Corporation of India Land and Assets Limited (SCILAL), has been incorporated for purposes of the demerger.

Shipping Corporation of India has filed the scheme of arrangement with markets regulator, the Securities and Exchange Board of India (Sebi), for its approval before it takes it to the National Company Law Tribunal for its stamp, as per established procedure.

The hive off of the non-core assets and the demerger was planned by Shipping Corporation of India in consultation with Niti Aayog, the ministry of ports, shipping and waterways and the Department of Investment and Public Asset Management. As per the transfer plan, the non-core assets would be demerged from the existing company and transferred to a new company whose shareholding structure will mirror that of Shipping Corporation of India.

The privatisation of Shipping Corporation of India has been running behind schedule after the government extended indefinitely a January 18 deadline for submission of financial bids for the company. ET had first reported about the indefinite extension in its January 18 edition.

According to sources ET spoke with at the time, the extension was attributable to delays in carrying out due diligence by interested bidders for the company who were unable to conduct physical inspection of ships because they were all overseas and the slow movement on the demerger process.

The government has shortlisted at least three bidders for the sale of Shipping Corporation of India. These include US-based Safesea group, a consortium led by NRI-businessman Ravi Mehrotra’sForesight Group and Hyderabad-based Megha Engineering, ET had reported in its edition on May 7.

https://economictimes.indiatimes.com/industry/transportation/shipping-/-transport/maharashtra-government-holds-key-to-shipping-corporation-of-india-privatisation/articleshow/91295726.cms

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